Adient Starts to Deliver on Turnaround

Automotive seating supplier Adient's ADNT fiscal third-quarter results support our thesis of a long-term turnaround story moving in the right direction, so we are leaving our $53 fair value estimate in place. Free cash flow of $168 million declined from the prior-year quarter's $252 million, but last year included $94 million of proceeds from factoring receivables. Through June for the year, premium freight costs have fallen about 65% versus fiscal 2018, but continued manufacturing problems in the Americas and the Europe, Middle East, and Africa segments, plus large volume declines in Asia from China, led to all three geographic segments posting year-over-year declines in adjusted EBITDA.